Qwest given more latitude under revised PUC rules

The state Senate's business, labor and technology committee gave preliminary approval Tuesday to rules changes that would give Qwest Communications International Inc. and other phone companies more latitude to increase basic local service rates in Colorado.

The Qwest-backed amendment to a bill reauthorizing the powers of the Colorado Public Utilities Commission won 5 votes from the seven-member committee Tuesday. The overall bill, HB 1227, now moves on to the Senate's appropriations committee.

If HB 1227 is approved by the Legislature and signed into law, the amendment would allow Qwest to hike its base rate as much as 32 percent, to $19.66 a month.

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That possibility drew opposition from the AARP at Tuesday's hearing. Provisions exempting the poorest customers from phone company rate hikes wouldn't apply to the majority of people living on fixed incomes, opponents argued.

Fred Wilhoft, an AARP advocate, said people in his retirement community would have to cut back on things like groceries and medication to afford that kind of increase against the backdrop of so many other rising prices.

"Most of the people where I live are going to be impacted by this ... negatively impacted," Wilhoft said.

Local basic phone rates are capped by the PUC under existing law using a formula starting with 1995 rates and then adding inflation and a federal government telecommunications "productivity" index. That formula makes Qwest's basic local $14.88 monthly, the same as it cost in 1991.

The amendment introduced Tuesday changes the formula to cap rates starting with May, 24 1995, rates and then peg any increases beyond that to the federal Department of Commerce's gross domestic product index. The law commits half the revenue from the first year's increase to a state fund meant to increase broadband Internet availability in rural Colorado, something Qwest supported.

John McCormick, Qwest's assistant vice president for Colorado, said after Tuesday's hearing that competitive pressures from wireless carriers, Voice over Internet Protocol providers and others make an immediate move by Qwest to the $19.66 monthly rate far-fetched.

"It's not very likely at all," he said.

In pushing for the amendment, Qwest is making its most high-profile attempt at winning over the Legislature since its stinging defeat over the creation of statewide television franchise rights a year ago.

Qwest Colorado president Chuck Ward says this effort is important because the company wants state regulation to catch up, not continue to lag behind in an intensely competitive telecommunications landscape. The revenue cap limits Qwest's ability to invest in its local infrastructure, he said.

The current rate formula was set 15 years ago. If it's left unchanged in the PUC authorization, it would keep the formula in place for another 11 years.

"I'd rather not wait until the telephone goes away before we get a little lighter regulatory environment," Ward said in a recent interview.